WFC, CELG, MU: Jim Cramer's Views

Jim Cramer shares his views every day on RealMoney. Click here for a real-time look at his insights and musings.


Cramer: Why Are These Stocks Doing Well?

Posted at 7:17 p.m. EDT on Thursday, Nov. 17, 2016

Sometimes you just want to keep a list of stocks that act too well. At the top of the list? Celgene (CELG) . This company had a very good quarter with lots of growth but has been stuck in a range forever. Now it is back to its old self, unlike the other major biotechs, and it's been soaring. Just plain bothersome not to know.

Next up? Micron (MU) and Advanced Micro (AMD) ? Both act like they are going to get bids any minute. AMD just did a major refinancing, so it is hard to believe something's going on there. Catch up to Nvidia (NVDA) ? But boy does it act well. Micron's breaking out but there was no real news flow on it that I thought warranted this move.

Or how about Resolute Energy (REN) , which has a big position in the Permian. Why is that stock not quitting? Same with Diamondback Energy (FANG) . How can that one keep roaring?

These are the oddities you keep spotting, stocks that don't come in when they should.

On any given day, there are a half-dozen plain old suspicious-acting stocks.

I follow them and I just wait, confident that something else is propelling them, something we will find out both soon enough and too late to profit from them.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

 

Cramer: Bank of America Rallied, but I See Why Some Still Want to Buy

Posted at 6:26 a.m. EDT on Thursday, Nov. 17, 2016

How do you thread the needle? A caller asked me what to do with Bank of America's (BAC) stock. This stock, this behemoth, just had a parabolic move from $16 to $20. It's a total spike.

Ideally, you never want to chase a spike. You have to wait. You have to be patient. You are rarely awarded when you pile in after a move this big, even as you did get a minor pullback Wednesday.

I said that if it sold off to $18 and change, that would be a great level to pull the trigger.

But in retrospect, one has to ask: if you think that Bank of America could be in for a big run what is the difference between $18 and $19? What does it matter? Why not just go buy it?

This is the decision facing a ton of people right now: whether to come in on top of this rally or wait for a pullback--and if it even matters.

We saw a half dozen prominent bank stock downgrades today, almost all of which I put in the category of too much, too fast. I get that; these downgrades were pretty much based on exactly the kind of reasoning I just mentioned: we just had a big move; there will be a better time to buy.

But here's the problem with that thinking. Last year at this time, we were concerned about multiple rate hikes that never occurred.

Now if there were ever a time for multiple rate hikes, it would be when you have a president that wants to cut taxes and spend. Anyone going that route is going to gin up growth and most likely, some inflation, even in this deflationary economy.

So why should Bank of America necessarily stop at $20? It's got the largest deposit base in the country. It is by far the more levered to short-term rates of any publicly traded institution. It's BAC's time. What's the difference of a dollar if a new rate cycle--and era--is upon us?

I think that for the longest time we had a basic reluctance to pay more than tangible book value for almost any bank other than Action Alerts PLUS charity portfolio holding Wells Fargo (WFC) . Now, that's the one bank we have a reluctance to do so--even though we are--and the rest are trading above book. Bank of America is now $3 above tangible book, after spending years in the wilderness. It's almost as if the gating factor that had held these stocks back has vanished and investors want these stocks as growth stocks not value plays.

That's right; we are thinking that there could be an earnings stream of growth from loans and income from net interest margin. The dividend hikes, the buybacks, those are just gravy. And if you dismantle Dodd-Frank, which costs these big banks literally billions of dollars to comply with, you take out a huge amount of regulatory cost.

No wonder these stocks have gone from worst to first.

But there is still the nagging issue of price. What do you pay for Bank of America, knowing you missed the move from $16 to $20?

I think the answer is that if you believe there are going to be multiple rate hikes, like I do, you wait to see if it gets back to $18, but that you accept that you may end up paying $20 because in this new regime I just don't think the buyers will let it go back to $16. It's as good a stock to own in a Trump regime as it would be to short in a Hillary regime.

Your best hope may be to scoop some up at a little discount to here based on the disarray in Washington and the worries that the speed with which things can be accomplished--or lack thereof--isn't as positive as the move has been itself.

So, I still want the pullback, but, in retrospect, I totally understand why someone wouldn't want to say "hey, Jim, if you are right, $19's the same as $18" and they just pull the darned trigger now.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long WFC.

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